Jose Mourinho will be installed as Chelsea's manager by tomorrow morning after one of football's most drawn-out sackings was finally confirmed yesterday. To the surprise of no one, Claudio Ranieri has lost his job as head coach at Stamford Bridge.

Ranieri's dismissal doubtless came as a relief to him, ending a charade that saw him summoned to two meetings with Chelsea's chief executive Peter Kenyon over the past week at which he was asked to discuss his future plans for the club.

The Italian plainly had no future there and the task of leading Chelsea forward instead goes to Mourinho, fresh from winning the Champions League with Porto. The Portuguese coach flies into London today having negotiated a four-year contract.

Dicussions about the terms of Ranieri's departure continue today via his representatives at First Artist but he seems almost certain to get a pay-off of £6m, the amount remaining on a deal which has three years to run. "We intend to honour the terms of Claudio's contract," a Chelsea insider said last night.

Ranieri was in Italy yesterday, where he was called by the Chelsea director Eugene Tenenbaum to be told that his reign at Stamford Bridge was over. Chelsea had not wanted to fire him before being certain that a successor was in place and the club needed to be patient before holding face-to-face talks with Mourinho because of Porto's involvement in the Champions League final.

Ranieri must decide now about his next move. He is likely to receive job offers across Europe but it is not inconceivable that he will take time off from coaching and remain in London, where he has bought a house and where he and his wife are happy.

Cushioned by Chelsea's pay-off, there is no financial imperative for the 52-year-old to work. He has, though, talked about wanting another Premiership job and will watch developments here closely. The only current vacancies are at Liverpool, who are set to appoint Valencia's Rafael Benítez, and Tottenham Hotspur.

The position at White Hart Lane is almost certain to appeal to Ranieri, who has been careful not to speak to other clubs knowing that might jeopardise his pay-off from Chelsea. Ranieri said he would have been interested in working at Roma, his boyhood team, after Fabio Capello left for Juventus but that post has gone to Cesare Prandelli, formerly of Parma.

Chelsea confirmed Ranieri's departure in a short statement that included mention of his work since he replaced Gianluca Vialli in September 2000. "Claudio has done a first-class job for the club and paved the way for future success," it said. "We would like to wish Claudio all the best for the future."

Ranieri finished second in the Premiership and reached the Champions League semi-final this season but it has been evident for some time that Kenyon and Chelsea's owner Roman Abramovich did not regard him as a coach who could fulfil their ambitions.

Pursuit of the England manager Sven-Goran Eriksson ended when the Swede agreed a new contract with the Football Association and Mourinho, who was not on Kenyon's initial shortlist, has come to the fore after building on his success at Porto. He is keen to bring players with him from his existing club, including the playmaker Deco. Several of his backroom staff will join him.

Ranieri knew the moment Abramovich arrived that he could struggle to keep his job. Realising that a new owner tends to want to appoint his own coach, he calculated after surviving the takeover that he could win every trophy on offer this season and still be sacked.

In the event he won nothing, a scenario that Kenyon had warned would constitute "a failure". Any last hope of staying disappeared when his tactical blunders contributed to Chelsea's Champions League semi-final defeat at 10-man Monaco. Ranieri made a point of bidding an emotional farewell to Chelsea's fans after a home victory over Leeds United on the final day of the season.

Expectation at Stamford Bridge shot up when Abramovich bankrolled spending of more than £110m last summer, bringing in players such as Juan Sebastian Veron, Claude Makelele, Damien Duff and Hernan Crespo. Ranieri said he would need time to knit the squad together but was never likely to be allowed that luxury.

He leaves without delivering a trophy in almost four seasons in charge but won plenty of admirers, initially for leading Chelsea into this season's Champions League with no investment and mostly for his conduct over recent months.

Chelsea's points' total increased in each full season under Ranieri and he took the club to the 2002 FA Cup final and the last four of the European Cup for the first time. But there was also significant disappointments, including Uefa Cup exits to Hapoel Tel-Aviv and Viking Stavanger, and the result in Monaco.

Now that the "dead man walking" has finally been laid to rest, Chelsea will look to Mourinho to inject new life.